For most people, Chris Anderson’s 2006 book The Long Tail marked a new way of thinking about selling goods on the Internet. Being free of the physical limits of shelf space, he predicted, would alter what people bought. For music, this would mean the most popular music titles would become less popular as consumers were able to tap into vast online catalogs. In most corners of the business world, and especially in the music industry, The Long Tail was controversial. Would consumers actually start to ignore the hits?

A Billboard analysis of Nielsen SoundScan data going back to 2004 shows Anderson wasn’t correct on all points. Hit digital albums have lost market share to far less popular titles. But hit digital tracks have gained market share over the years. The top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks’ share stood at 18.7%.

The top 200 digital albums have shown an opposite trend in market share, steadily dropping to 21.9% in 2008 from 28.7% in 2004. At 22.1%, digital albums’ market share through October, 2009 is slightly better than 2008’s figure.

These two trends imply album and track purchase decisions may be driven by different factors. The most popular tracks may be benefitting from a herd effect due to the viral nature of the Internet. The awareness generated by that small number of songs could drown out less popular songs. Album buyers show they have more diverse tastes and take advantage of the vast catalogs at online retailers. So consumers may prefer to sample the depths of long tail through albums, not by individual songs.

Any discussion of Anderson’s book and theories should include how the record label’s role has changed. A popular sentiment of The Long Tail is that artists have all the tools they need to self-release digital music. That is true. Barriers to entry have been lowered to the point where the costs of recording and commercially releasing music are negligible. As Anderson explained in The Long Tail, cheaper tools of production and distribution have greatly increased the supply of music found online.

But acquiring distribution and getting a sale are two different things. People tend to underestimate the amount of competition faced in digital music. Over 100,000 albums were released in 2008 alone – and about half of those were digital-only releases. Not only does a title have to compete against other new releases, it has to compete against the tens of thousands of well known catalog titles that are available online. It takes resources – both money and expertise – to rise above the competition and achieve sales commensurate to what career-oriented artists need. Such resources are the domain of record labels, who can still find success in the digital world.

While The Long Tail was less explicit about record labels’ role in a changing digital marketplace, in July Anderson told The Times that record labels “are now the least important part” of the music industry. That is true for those with very low sales goals. These days a more established artist, or a mere hobbyist, can circumvent a contract with a record label by using inexpensive digital tools and outsourcing some record label functions. For the more ambitious and the less established, a record label is still by far the best way out of obscurity.

Summary of Billboard’s analysis:

• As more digital albums are released, the more popular titles lose market share to the less popular titles. In other words, demand has shifted from the hits to the niches. The head (what Anderson would call the top 5,000 titles) has lost market share to the tail (all other albums). The head accounted for 77% of digital album sales in 2005. By 2008, the head’s market share had steadily dropped to 65%.
• Sales of digital albums have become less hit-oriented while digital tracks have become slightly more hit-oriented. The top 200 digital albums have accounted for a smaller share of total digital album sales since 2004. In contrast, the top 200 digital tracks’ share of total sales has nudged upward during that time period.
• Sales of individual tracks (those purchased independently, not as part of an album) account for the majority of digital music purchased in the U.S. Individual tracks accounted for 57% of all digital music sold in 2008 (assuming 12 tracks per album).
• In any given week, the top 200 digital tracks account for nearly one in four track purchases. To put that in context, Amazon.com’s MP3 store currently lists 9.99 million tracks. So, the top 200 tracks represent only 0.002% of what a large download store stocks.
• Even titles in the tail (below #5,000) have lost some market share recently. In 2008, the top 8,000 digital albums lost market share to lower-ranked albums. But it wasn’t the best-selling albums that suffered the most. Albums ranked from #200 to #800 suffered the biggest drop in digital album market share from 2004 to 2008 – between 25% and 34%
• While lower ranks have gained market share over the years, any one title has not gained much. For example, an album ranked at #9,000 in 2008 sold about 1,050 digital albums. Less than 100 of those units can be attributed to gains in market share over the previous four years.

An expanded version of this story first appeared at billboard.biz.

While the chatter leveled off during the July 4 weekend, it is expected to bubble up again surrounding his public memorial on Tuesday, July 7.

“There wasn’t much discussion online about Michael Jackson – other than by his diehard fans – a year before, and even a day before, he died,” said Jon Gibs, Vice President, Media and Agency Insights at Nielsen Online. “Then, immediately after his death, everyone on the ‘Net was talking about him — at unprecedented volumes.”

Beyond The Buzz

Analysis of online conversations by Nielsen Online shows that most sentiment about him before his death was neutral, with almost a quarter being negative.  Post-death, 47 percent of the online conversations were positive, as fans past and present discussed his legacy and record-breaking hits like “Thriller,” “Beat It,” and “Billie Jean.”

On the day before his death, Jackson warranted one mention on TV among the major networks in New York City (a single mention on “The View”), generating just 282,000 household viewing impressions.  As events unfolded, household viewing impressions skyrocketed to almost 200 million. (see graphic)

While some may believe that media coverage of Jackson’s death and the upcoming public memorial service has been overdone, his fans – past and present – have used his passing as a way to celebrate the music he made in a career that spanned more than three decades.  Even in death, his music is breaking records: eight of the top 10 positions on Billboard’s Top Pop Catalog Albums chart last week were occupied by Jackson, with another belonging to the Jackson 5.  Jackson’s solo albums sold 415,000 copies last week, according to Nielsen SoundScan, up from approximately 10,000 the week prior to his death.

For complete chart and sales history, visit Billboard.com’s Michael Jackson site.

Artists such as Lil Wayne, Taylor Swift, Rihanna, Coldplay and Flo Rida helped consumers make more decisions to buy music than ever for the fourth year in a row according to Nielsen SoundScan. While total album sales slipped 14% from 500.5 to 428.4M in 2008, sales of digital albums were up 32% from 50M to 65.8M in 2008. Sales of individual digital tracks also grew, soaring 27% over the previous year’s sales. Ironically, in the new digital age, sales of vinyl LPs were at an all-time high (1.88M).

More SoundScan data is available in Billboard’s Year In Music 2008, which features 250 Year-End charts.

Year In Music 2008 Factoids:

• Music purchases in 2008 reached 1.5 Billion, marking the fourth consecutive year music sales have exceeded 1 billion; 1.4 billion (2007) vs. 1.2 billion (2006) vs. 1 billion (2005) .
• Music sales exceeded 65 million in the final week of 2008, representing the biggest sales week in the history of Nielsen SoundScan. The previous record was Christmas week 2007 with 58.4 million music purchases.
• Metallica’s “Death Magnetic” is the best selling Internet album for the year with 144,000 sales.
• During 2008, more vinyl albums were purchased (1.88 million) than any other year in the history of Nielsen SoundScan. The previous record was in 2000, with 1.5 million LP album sales.
• Note that more than 2 out of every 3 vinyl albums were purchased at an independent music store during the year.

Holiday Season Factoids: (last 6 weeks of year).

• Overall album sales during the 2008 holiday season were down 19% as compared to 2007, with sales of just over 80 million.
• Album sales during the holiday season accounted for 19% of all album sales for the year.
• Digital album sales during the holiday season experienced significant growth over 2007 with an increase of 37% to 9.9 million sales.

Digital Factoids:

• Digital track sales break the 1 BILLION sales mark for the first time with more than 1,070,000 digital track sales. The previous record was 844 million digital track purchases during 2007; an increase of 27% over 2007.
• Digital album sales reached an all-time high with more than 65 million sales in 2008; up from 50 million in 2007; an increase of 32% over the previous year.
• 2008 is the first time a digital song broke the 3 million sales mark in a single year. There were 2 songs that achieved this milestone; Leona Lewis’ “Bleeding Love” and Lil Wayne’s “Lollipop;” with sales of 3.4 and 3.2 million respectively.
• In 2008, there are 19 different digital songs with sales that exceeded 2 million compared to 9 in 2007.
• 71 Digital Songs exceeded the 1 million sales mark for the year compared to 41 digital songs in 2007, 22 in 2006, and only 2 digital songs in 2005.
• Rihanna is the biggest selling digital artist in 2008 with nearly 10 million track sales compared to Fergie in 2007 who had 7.5 million track sales.
• There are more than 450,000 different physical albums that sold at least one copy over the Internet during 2008 compared to 390,000 in 2007.
• Note that digital album sales accounted for 15% of total album sales compared to 10% in 2007 and 5.5% in 2006.

Digital Records Broken In Last Reporting Week Of 2008:

• Digital track sales surpassed 47.7 million. The previous sales record was 42.9 million, week of 12/23 -12/30/07.
• Digital album sales this week broke the two million mark for the first time with sales of 2.4 million sales; breaking the previous record of 1.9 million (12/30/07).
• The top 200 digital songs for the week posted an all-time high with 13.6 million sales; breaking the previous record of 11.9 million during the last week of 2007.
• The first time that the Top 5 digital songs (combining all versions of the same song) sold more than 300,000 downloads in a week with Lady Gaga’s “Just Dance” selling 419,000. The record for most downloads for a digital song in one week continues to be Flo Rida’s “Low” with sales of 467,000 set during the last week of 2007.

Best Seller Factoids:

• Lil Wayne’s Tha Carter III was the biggest selling album of the year with 2.8 million sales.
• Taylor Swift is the biggest selling solo artist, with sales greater than 4.0 million albums and AC/DC is the biggest selling group in 2008 with sales of 3.4 million.
• As Taylor Swift stands at the top of the list, marking the 2^nd time in the last three years that a country artist is the top selling artist for the year.  Rascal Flatts was the biggest selling artist in 2006 with 5 million sales.  Josh Groban took the honors last year (2007) with 4.8 million sales.
• Taylor Swift’s Fearless and self-titled album finished the year at #3 and #6 respectively with sales of 2.1 and 1.5 million. This is the first time in the history of Nielsen SoundScan one artist had two different albums in the Top 10 on the year end album chart

In his new role, Werde will oversee the brand’s staff of editors and reporters worldwide.  He replaces Tamara Conniff, who is leaving to become president of music services for Irving Azoff’s Front Line Management Group.

Before joining Billboard in 2005 as senior news editor, Werde was an associate editor at Rolling Stone.  He was promoted to deputy editor of Billboard in 2006, before being promoted to executive editor last year.

Full disclosure: Billboard is owned by Nielsen.